Gr12 Topic 6 Perfect markets

when total costs are greater than total revenue, or when average revenue is lower than average cost the firm makes an economic loss

profit that is made in addition to normal profit, when average revenue is greater than average cost the firm makes an economic profit

actual expenditure of business, e.g. wages and interest

value of inputs owned by entrepreneur and used in the production process (forfeited rental, interest and salary)

the period of production where all factors of production (and costs) can change - the time is long enough for variable and fixed factors to change

an institution or mechanism that brings together buyers and sellers of goods or services

how a market is organised

a market structure in which businesses have many competitors, but each one sells a slightly different product (e.g. CD's and books)

exclusive control of a commodity or service in a particular market

the minimum earnings required to prevent an entrepreneur from leaving the industry - when average revenue equals average cost the firm makes a normal profit

a market structure controlled by a small group of businesses

a market structure with large numbers of producers and buyers

an individual firm that has no influence on price - it takes (accepts) price that is determined by the market

the period of production where only the variable factors of production can change while at least one factor is fixed

businesses will close where MC = AVC (at the price equal to the minimum of the AVC curve)